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Hungary: country overview

Hungary fell under communist rule following World War II. In 1956, a revolt and an announced withdrawal from the Warsaw Pact were met with a massive military intervention by Moscow. Under the leadership of Janos KADAR in 1968, Hungary began liberalizing its economy, introducing so-called "Goulash Communism." Hungary held its first multiparty elections in 1990 and initiated a free market economy. It joined NATO in 1999 and the EU five years later.

Country overview

Hungary is a landlocked state with many neighbours – Slovakia,
Ukraine, Romania, Serbia, Croatia, Slovenia and Austria. It is mostly
flat, with low mountains in the north. Lake Balaton, a popular tourist
centre, is the largest lake in central Europe.

The ancestors of ethnic
Hungarians were the Magyar tribes, who moved into the Carpathian Basin
in 896. Hungary became a Christian kingdom under St Stephen in the year
1000. The Hungarian language is unlike any of the country’s neighbouring
languages and is only distantly related to Finnish and Estonian.

The capital city, Budapest,
was originally was two separate cities: Buda and Pest. It straddles the
River Danube, is rich in history and culture and famed for its curative
springs. Hungary has a single-chamber parliament or national assembly
whose 386 members are elected by voters every four years.

Hungary has some limited
natural resources (bauxite, coal, and natural gas), as well as fertile
soils and arable land. Hungarian wines are enjoyed throughout Europe.
The country‘s main manufactured exports include electric and electronic
equipment, machinery, foodstuffs and chemicals.

Hungary is a highly musical
country whose traditional folk music inspired such great national
composers as Liszt, Bartók and Kodály. Other famous Hungarians include
Albert Szent-Györgyi, who discovered the existence of Vitamin C, writer
and Nobel Prizewinner Imre Kertész and Oscar-winning film director
István Szabó.

Economy overview

Hungary has made the transition from a centrally planned to a market
economy, with a per capita income nearly two-thirds that of the EU-28
average. In late 2008, Hungary's impending inability to service its
short-term debt - brought on by the global financial crisis - led
Budapest to obtain an IMF/EU/World Bank-arranged financial assistance
package worth over $25 billion. The global economic downturn, declining
exports, and low domestic consumption and fixed asset accumulation,
dampened by government austerity measures, resulted in a severe economic
contraction in 2009. In 2010 the new government implemented a number of
changes including cutting business and personal income taxes, but
imposed "crisis taxes" on financial institutions, energy and telecom
companies, and retailers. The IMF/EU bail-out program lapsed at the end
of the year and was replaced by Post Program Monitoring and Article IV
Consultations on overall economic and fiscal processes. At the end of
2011 the government turned to the IMF and the EU to obtain financial
backstop to support its efforts to refinance foreign currency debt and
bond obligations in 2012 and beyond, but Budapest's rejection of EU and
IMF economic policy recommendations led to a breakdown in talks with the
lenders in late 2012. Global demand for high yield has since helped
Hungary to obtain funds on international markets. Hungary’s progress
reducing its deficit to under 3% of GDP led the European Commission in
2013 to permit Hungary for the first time since joining the EU in 2004
to exit the Excessive Deficit Procedure.